Incident Overview: The company issued a November sales announcement. Total wholesale sales volume in November was 0.25 million vehicles, +25.0% year over year, +10.3% month on month; cumulative 1.967 million vehicles from January to November, +28.4% year on year. Among them, NEV sold 122,453 vehicles in November, +88.3% YoY, +12.6% month-on-month, with a penetration rate of 49.0%; in January-November, NEV sold 0.777 million vehicles, +82.0% YoY. By brand: Geely sold 0.19 million vehicles in November (75,228 Galaxy vehicles (including geometry)), with cumulative sales of 1.512 million vehicles (Galaxy 0.425 million vehicles) in January-November, +25.8%; ZEEKR sold 27,011 units in November, with a cumulative total of 194,933 units in January-November, +85.5%; Linker sold 32,679 units in November, with sales of 259,356 vehicles in January-November, +33.3% year-on-year.

Wholesale was strong in November, and new energy showed impressive performance. Driven by the increase in new products from the Galaxy and ZEEKR brands, the company's overall wholesale sales performance was strong, with total wholesale sales of 0.25 million vehicles, +25.0% year-on-year and +10.3% month-on-month. Benefiting from the increase in sales volume of Galaxy E5 and Xingyuan 7X, the new energy sales performance was strong. In November, the company sold 122,453 new energy units, +88.3% year-on-year, +12.6% month-on-month; of these, Galaxy sold 75,228 units in November, +18.5% month-on-month; GKrypton sold 27,011 units, +7.8% month-on-month, with impressive performance.

Starship 7, GEA architecture's first plug-in hybrid product, will be launched soon. The GEA architecture uses an 11-in-1 electric drive+self-made Aegis dagger battery to reduce costs, and the new Xingyuan and Galaxy E5 cars increase the company's pure electric market share logic. Recently, the Galaxy Starship 7 EM-i, the first plug-in hybrid SUV of GEA architecture, began pre-sale. It will go on sale on December 6. The pre-sale price is 0.1198-0.1528 million yuan, and the first-time pickup price is 0.1098-0.1428 million yuan. The Starship 7 EMI is equipped with a 1.5L plug-in hybrid system+single-speed hybrid transmission, and the overall efficiency of the system is up to 92.5%; in terms of space, the Starship 7 is 4,740*1,905*1,685 mm, and the wheelbase is 2,755mm; in terms of configuration, the Starship 7 comes standard with a 16-speaker Flyme Sound sound system, Flyme Auto smart cockpit, W-HUD head-up display system, etc., providing an advanced experience. We believe that Starship 7 is expected to interpret the logic of increasing the share of mixed use and strengthen the company's second-generation NEV position below 0.1-0.2 million. We are optimistic that the company's NEV brand will improve its potential and efficiency, and that technology will reduce costs and scale to accelerate the NEV business into a positive profit cycle.

Geely increased its holdings in ZEEKR and held Lynk & Co., and organizational changes helped consolidate and concentrate the Group's internal resources. On November 14, Geely Holdings announced the optimization of the shareholding structure of ZEEKR and Linker. After the transaction, Geely Auto's shareholding ratio in ZEEKR will increase from 51.5% to about 62.8%, and the interest in holding Lynk & Co will also increase from 50% to 81%. We believe that this equity adjustment will help promote strategic focus, integration and collaboration, clarify the positioning of each brand, rationalize equity relationships, reduce conflicts of interest and repeated investment, improve resource utilization efficiency, promote deep integration and efficient integration of internal resources, and enhance the overall operating efficiency of the Group.

Investment advice: The company accelerates over curves in terms of brand power, product definition and innovative marketing, pointing the finger at international first-tier car companies. After adjusting the profit forecast, revenue for 2024-2026 is expected to be 224.78/277.69/308.83 billion yuan, net profit due to mother of 16.04/12.58/16.32 billion yuan (including income from sale of HORSE shares in 2024), and EPS of $1.59/1.25/1.62, corresponding to PE 8/10/8 times the closing price of HK$13.86 on November 29, 2024, maintaining the “recommended” rating.

Risk warning: New car sales fall short of expectations; the “price war” intensifies; EU tariffs affect overseas sales profits.